The credit card ABS sector was reshaped in 2009 by a confluence of credit, funding, legislative, regulatory, and accounting challenges.Consumer credit quality deteriorated throughout the year, driven by a prolonged and severe economic downturn, rising unemployment and a lack of credit availability for consumers. As a result, Fitch's chargeoffs and 60+day delinquency indexes reached record highs during the year and remain elevated.
From a funding perspective, the launch of TALF helped alleviate some challenges and coaxed the return of traditional investors to senior tranches. Also, pending implementation of SFAS 166 and 167 cast uncertainty over the economics of funding through the ABS markets going forward and called into question the Federal Deposit Insurance Corp.'s treatment of bank sponsored securitizations in the event of conservatorship or receivership for a short while. On other fronts, the U.S. Congress swiftly enacted legislation aimed at curtailing the use of certain risk based pricing practices.